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Jim Cramer sees signs that inflationary pressures are easing, believes the Fed’s political approach is correct




CNBC’s Jim Cramer said on Tuesday that he was encouraged by a number of inflation-related developments, claiming that they give further confidence to Federal Reserve Chairman Jerome Powell’s prospects that much price pressure will be temporary.

The “Mad Money” host pointed to a decline in the prices of chemicals that act as economical “building blocks” such as polyethylene, as well as the fact that oil has become “solid” at between-to-low $ 80 per barrel instead of breaking out near $ 1[ads1]00 as someone had predicted.

“I do not think Powell needs to slow down the economy,” Cramer said, referring to proposals that the central bank must raise interest rates in response to hot inflation data. “Despite what you hear from the inflationists and the media, the weight of the evidence is finally going Powell’s way – team transitory is going to win.”

Cramer said there are several reasons for this belief, for example a research note from Morgan Stanley regarding improvements in production at Malaysian semiconductor factories known as fabs. It should help alleviate the chip shortage that has damaged key industries such as cars and caused used car prices to rise, Cramer said.

“I know that Taiwan Semi, the largest foundry in the world, has not been done. It still has a problem, still does not produce enough chips, and the Malaysian factories can not cover that shortcoming,” Cramer said. “But do you know how quickly the price of used cars will plummet when car manufacturers can increase production of new ones?” he asked rhetorically.

Another worrying supply chain problem – congestion in US ports – also appears to be improving, Cramer said. He referred to a Bloomberg report on Tuesday that the number of long-term cargo containers at the port of Los Angeles has fallen 29%.

“Can we really ignore that number? Remember that the White House has taken all sorts of steps to sort out the port situation. I do not think they are completely useless,” he said.





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